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How To Start a Non-Profit: A Step-By-Step Guide

By Brandon Williams, VP of Marketing

Starting a nonprofit can be one of the most rewarding decisions you’ll ever make. Whether your goal is to serve your community, provide resources, or address a specific need, launching a nonprofit allows you to create lasting impact.

But alongside the vision and excitement, you must also establish a solid legal foundation. A strong foundation ensures your nonprofit is compliant, protected, and positioned for long-term growth.

Here are the essential steps to start a nonprofit organization the right way.

Step 1: Incorporate* Your Nonprofit

The first step in starting a nonprofit is to legally incorporate* with your state (or county, where applicable).

  • Why it matters: Incorporation creates a legal entity separate from its founders, protecting board members and officers from personal liability. This protection is commonly called the corporate veil.

  • How to incorporate*:

    • Choose a unique nonprofit name and confirm availability with your state’s Secretary of State.

    • Draft and file Articles of Incorporation*.

    • Include a clear purpose statement, dissolution clause, and IRS-compliant language.

Step 2: Obtain a Federal Employer Identification Number (FEIN)

Once incorporated, you must apply for a Federal Employer Identification Number (FEIN) from the IRS. Think of it as the Social Security number for your nonprofit.

With your FEIN, you can:

  • Open a bank account in the nonprofit’s name

  • Receive donations

  • Hire employees and manage payroll

Step 3: Create and Adopt Bylaws*, Policies, and Procedures

Your bylaws* are one of the most important governing documents for your nonprofit. They serve as the framework for how your organization operates and ensure consistency in decision-making.

Bylaws should:

  • Define the nonprofit’s mission and purpose

  • Outline board roles and responsibilities

  • Provide rules for decision-making, succession planning, and financial oversight

  • Ensure compliance with IRS and state nonprofit requirements

In addition to bylaws, nonprofits need policies and procedures to govern daily operations. Common examples include:

  • Accountable reimbursement policy

  • Conflict of interest policy

  • Benevolence policy

  • Indemnification policy

  • Anti-terrorism policy

Well-crafted bylaws and policies provide protection, clarity, and accountability.

Step 4: Apply for 501(c)(3) Tax-Exempt Status

Most nonprofits seek 501(c)(3) status with the IRS to be officially recognized as tax-exempt.

  • How to apply: File Form 1023 (Application for Recognition of Exemption).

  • What you receive: An IRS Determination Letter confirming your 501(c)(3) status.

  • Why it matters:

    • Exemption from federal income tax

    • Ability for donors to give tax-deductible contributions

    • Access to grants and funding opportunities

⏳ Note: Nonprofits with annual gross receipts of $5,000 or more must apply within 27 months of incorporation for retroactive tax-exempt recognition.

Step 5: Stay Compliant by Filing Form 990

Unlike churches, most nonprofit organizations must file Form 990 annually with the IRS. This filing keeps your nonprofit in compliance and provides transparency.

The type of Form 990 depends on your nonprofit’s size:

  • Form 990-N: For very small nonprofits

  • Form 990-EZ: For mid-sized nonprofits

  • Form 990 (Long Form): For large nonprofits

Failure to file can result in penalties or even loss of tax-exempt status.

Final Thoughts: Starting a Nonprofit with Confidence

Starting a nonprofit is about more than passion—it’s about building an organization on a strong legal and organizational foundation. Incorporation*, bylaws*, and tax-exempt recognition protect your mission and set you up for long-term success.

At StartCHURCH, we help leaders and founders establish nonprofits with confidence. From incorporation* to bylaws* to 501(c)(3) approval, our specialists walk with you every step of the way.

Call us today at 770-638-3444 to speak with a specialist.
Or click below to schedule a consultation and begin your nonprofit journey today.

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Notable Mentions

Ordination 

When establishing the legal foundation for your ministry, you will need to determine early on if your ministry will legally license and ordain ministers of the gospel. Legal ordination allows ordained ministers to receive tax benefits, such as housing allowance and self-employment tax exemption, that are afforded to ordained ministers.

For your ministry to legally ordain ministers, there should be language indicated in your articles of incorporation and bylaws that the ministry will do so.

Form 990

Any nonprofit organization, except churches, is required to file Form 990 annually. The IRS uses Form 990 to ensure that tax-exempt organizations remain compliant with the tax code and nonprofit laws to stay a tax-exempt entities.

The form you should file is dependent upon your ministry's amount of income and assets. The five forms are Form 990-N, Form 990-EZ, Form 990-Long, 990-PF, and 990-T. If your ministry fails to file the appropriate Form 990 for three consecutive years, the IRS will revoke the organization's tax-exempt status!

27-Month Timeframe

Nonprofit organizations that are not churches must apply for the 501(c)(3) status within 27 months of incorporation to receive approval retroactive to the date of incorporation. Churches do not have a specified timeframe to file for the 501(c)(3) status.

Retroactive Nature

The 501(c)(3) status is retroactive to the organization's date of incorporation, as long as the application is applied within the allotted time window.

This means that after your ministry gets incorporated and obtains its FEIN, you can open up a bank account and begin receiving donations. These donations will be considered charitable contributions, both from the donor and the organization, because of the retroactive nature of the 501(c)(3) status.

Labor with the Lord, and be compliant with the government

"Then Jesus came to them and said, "All authority in heaven and on earth has been given to me. Therefore go and make disciples of all nations, baptizing them in the name of the Father and of the Son and the Holy Spirit, and teaching them to obey everything I have commanded you. And surely I am with you always, to the very end of the age." - Mathew 28:18-20

While all of this information may seem a bit overwhelming, Jesus has promised that he will be with you as you embark upon this endeavor of starting a nonprofit. At StartCHURCH, we promise to partner with you to help establish and maintain your ministry as a compliant organization so that you can focus on God's call for you. Through our StartRIGHT Service, we will guide you through the process of legally establishing your organization and protecting what God has called you to lead.

Call us at 770-638-3444 to learn how our StartRIGHT Service can help you!

*StartCHURCH provides clerical assistance to help you process your own articles of incorporation and prepare your own bylaws. StartCHURCH does not provide legal advice.

 

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